Verenex says Libya puts sale of firm at risk

By IBT Staff Reporter On 06/22/09 AT 10:53 AM

CALGARY, Alberta - Canada's Verenex Energy Inc said on Monday that Libyan authorities have not yet approved the C$499 million ($434 million) sale of the company to China National Petroleum Corp, putting the deal at risk.

Verenex, a small oil producer operating in Libya, said it is still seeking Libyan approval for plans to sell its operation to the Chinese firm, though Libya's National Oil Company (NOC) has publicly mulled plans to match the offer.

Verenex requires the consent of the NOC for the C$10 per share deal, announced in February, to go ahead. However Jim McFarland, the company's chief executive, said Libya's General People's Committee - which he said was a group of senior government officials - has also questioned the deal.

We still don't have a decision from either the NOC of the GPC, McFarland said. At the end of the day, the GPC really has to make the final decision.

Verenex cautioned investors that Libya's refusal so far to sanction the CNPC offer may scuttle the deal entirely. It said it is reassessing its operations and expenditures because of the delays and has sufficient cash to fund its business for the next few months.

Verenex also said the NOC has sent it a letter saying it was investigating allegations that it was improperly qualified to bid for stakes in Libya's oil fields in 2005.

Verenex said considers the allegations to be without merit.

The company also said it has extended the closing of the sale by two months to Aug. 24, a provision allowed in the original agreement with CNPC.

Verenex shares fell C$2.66, or 31 percent, to C$5.96 early on Monday on the Toronto Stock Exchange.